Better get those delicious burgers from the new sandwich shop down the street now, because odds are that they won’t be around for long. Studies show that more than 50% of businesses fail during their first five years. There may be many reasons why so many businesses continue to fail, but lack of critical pre-launch activities are often times the fatal error.
Here are 10 things that you should do before opening your doors to ensure that your business defies the odds, and has a real chance of success.
1. Get the Appropriate Licenses and Permits
It is important that you obtain the applicable federal and state licenses and permits required for your business in order to run your business legally. Operating without such licenses or permits could not only put your business itself at risk by being shut down as a penalty by the overseeing agency, but could put your most valuable asset in danger — your reputation.
2. Understand Employer Responsibilities
If you plan on having others work for your business, you’ll need to understand the legal steps that you must take to hire employees. Aside from tax responsibilities, you will need to register with your state’s new hire reporting program, as well as obtain workers’ compensation insurance.
3. Know Your Tax Requirements
First, you need to determine what business taxes, such as city, county and state will apply to your business. The most common types of tax requirements for small businesses are income taxes and employment taxes. There isn’t one list of all the fees you may have to pay so you need to get organized and figure it out ahead of time to keep late fees from quickly adding up. You’ll also need to secure a unique employment identification number for your business from the IRS.
4. Get Legal Advice
Business owners often make the presumption that legal counsel is only needed once they’re already in hot water, but by then it’s either too late, or some degree of damage to your business has already been done. Investing in legal insight from the beginning could potentially save you a fortune down the road. One huge area where an attorney can provide you with pre-opening advice is with regard to business entity formation. That decision will affect your personal liability and how your business will be taxed and managed. An attorney would also be able to advise you on many other aspects of starting your business, such as how to classify those who will work for you, and how to go about financing your business.
5. Be the Man With a Plan
Create a sound business plan. Developing a business plan can be tedious, but it is an essential roadmap for business success. Having a well-designed business plan isn’t only necessary for investors, but will be exponentially valuable to you. A few key components to be sure to include in your plan are: an executive summary that touches on your company profile and goals; a company description that demonstrates what your business does and what makes you different; a description of your service or product line describing what you sell and what its value is; financial projections; marketing and sales strategies; and a description of how your business will be organized and managed.
6. Do Your Homework
Research, research, research ¾ this is a crucial first step before opening the doors of any business. You really need to consider and find solutions to all the who’s, what’s, where’s, when’s, why’s, and how’s. How is what you’re offering different? Is there a market for what you’re selling? How do you plan to market your business? Where will you run your business? How will you pay for the cost of starting your business? Who is your competition, and how are they doing? How will your business be run? These are all questions that you must carefully consider and adequately research.
7. Make a Snazzy Website
It’s extremely difficult to succeed in business without a functional website in a world where every time someone wants to know anything about anything, they Google it. Web design and content marketing for your business is not the time to become a “do-it-yourselfer” if you have no previous experience in that field. You need a website that is navigable, and aesthetically appealing on any device, which generally requires hiring an expert. Further, a marketing expert could utilize other avenues to spread your brand everywhere, including social media. Many relationships you’ll have with customers or clients will be built online before they even walk through your door, so do not undercut this expense!
8. Make Sure You Have Enough Dough
When starting a business, it’s not enough to just have cash to cover your start up costs. You must have sufficient capital to operate the business long enough for it to become profitable, without personally bankrupting yourself. Anticipating that the business will become profitable in an unrealistic amount of time is a major mistake that a lot of entrepreneurs make. You must be smart and strategic with the initial funding of your business if it will have any chance of success.
9. Make a Serious “Gut-Check”—Do You Really Have What it Takes?
By the time you’re ready to embark on this journey, you should be eating, drinking and sleeping your plan and vision for the future. You should be able to precisely answer the question, “Why am I doing this?” There will be many trying times ahead, and you will have to remind yourself of the drive and ambition that initially inspired your voyage. You must also recognize that drive and ambition alone aren’t enough; you must be patient and understand that there will be mistakes, you can’t make everyone happy all the time, and don’t expect to profit immediately. Keep in mind: the early bird might get the worm, but they taste gross anyways—slow and steady is what wins the race!
10. Sit in the Front Row, Ask a Lot of Questions, Make Some Friends
Finding a successful entrepreneur, particularly in your field, to confide in can serve as an invaluable sounding board. They’ve been there, they’ve succeeded, and they may be able to offer helpful insights into how to operate a successful business—listen to them!
Good luck to all of you! Follow these 10 steps to help ensure that your business becomes the next success story!
Alex Gertsburg is a managing partner at Gertsburg Licata. He may be reached at (216) 573-6000 or at [email protected].
Gertsburg Licata is a full-service, strategic growth firm, specializing in business law, M&A advisory and executive talent solutions for entrepreneurs and executives of start-up and middle-market enterprises. Contact us today to discuss how we can help you secure your next competitive advantage. We are also home to CoverMySix®, our unique, anti-litigation audit service for middle-market companies.
This article is for informational purposes only. It is merely intended to provide a very general overview of a certain area of the law. Nothing in this article is intended to create an attorney-client relationship or provide legal advice. You should not rely on anything in this article without first consulting with an attorney licensed to practice in your jurisdiction. If you have specific questions about your matter, please contact an attorney licensed to practice in your jurisdiction.
